For immediate release: Tuesday, May 7, 2013

For more information: Bill Mahoney, (518) 817-3738

Malignant Neglect: The Abject Failure of the States Campaign Finance Laws 103,805 Violations of New York State Campaign Finance Law in Past Two Years Comparing enforcement of campaign finance law in Albany and New York truly is a tale of two cities. In Albany, it is unfortunately the worst of times for voters longing for ethical and transparent government driven by a functioning electoral system. In the 2009 election cycle, the New York City Campaign Finance Board imposed 128 penalties on 31 candidates for over-the-limit contributions. When the Board of Elections has received complaints about similar violations in the state level in 2009, for example, NYPIRG identified 346 corporations that donated more than the states $5,000 aggregate annual limit letters were sent to the donors, but no penalties were ultimately levied. In the 2009 election cycle, the New York City Campaign Finance Board imposed 95 penalties on 20 candidates for reporting donations from unregistered political committees. Yesterday, Citizens Union identified 224 political clubs in New York City that had donated to or received funds from state candidates while failing register as committees. In the 2009 election cycle, the New York City Campaign Finance Board completed 219 audits as of April 2013. That year the Board of Elections completed 0. Recent news that their enforcement unit has no staffers indicates this is unlikely to change anytime soon. The one enforcement activity that the Board of Elections has claimed success in is identifying candidates that do not file on time. In their 2011 annual report, they claimed to have mailed 9,848 letters to treasurers letting them know their filings were late.1 They imposed small fines on 792 of them. Unfortunately, this practice of enforcement-by-letter has not stopped candidates from failing to file. An August 2012 report by NYPIRG found that over $31 million in campaign funds has gone missing in action. 2,328 active committees had not disclosed any transactions in the July filing period, including 622 committees with over $12M in the bank that appear to have fallen off of the grid and simply stopped filing.
1

2011 Annual Report, p 28: http://www.elections.ny.gov/NYSBOE/download/AnnualReport2011.pdf

Many of the violations summarized in this report are admittedly relatively minor. The failure of a candidate to provide the address of a vendor they paid is not ipso facto evidence of corruption. However, these omissionsin such huge quantitiescan prevent auditors or members of the public from uncovering more serious violations of the law. In any event, missing information means the public gets an incomplete picture of how campaign funds are raised and spent. The severity of corruption among participants in the New York State system has been exponentially greater than in New York City, as can be seen in cases such as that of former Comptroller Hevesi. Cases like the recent conviction of City Comptroller Lius treasurer are uncovered less frequently at the state level since the information needed to alert investigators is masked by the shroud of opacity created when thousands of candidates fail to obey disclosure laws. Further, the massive number of minor violations is indicative of a system in which the purported enforcement entity is willing to tolerate a complete disregard for its regulations. Lax enforcement of minor violations can both hide more serious corruption problems and breed a general sense of lawlessness that lets some politicians grow comfortable with ignoring ethics and election laws. Many of the public officials recently accused or convicted of corruption would have been at the top of the following lists in years past. Senator Pedro Espada and Assemblyman William Boyland, for example, each failed to submit dozens of legally-required disclosure forms. Under a functioning campaign finance system, these early red flags should have told investigators to examine their political dealings more closely. Unfortunately, failure to obey basic laws such as the requirement to file are so common that the entire system is held in disregard. Methodology This analysis examines campaign finance disclosure reports submitted to the New York State Board of Elections between January 2011 and January 2013. All of the information is current as of April 26, 2013. Violation Totals Count 278 18,156 44,834 454 429 14,606 80 22,416 2,328 224 Type Entities reported as corporations giving more than $5,000 in 2012 Donations with no address Expenditures with no address Donations with no date Expenditures with no date Itemizations filed improperly Expenditures with no payee Expenditures with no correct expenditure code Committees failing to report as of July Political clubs not registered

Corporations Donating More than $5,000 in 2012 The Boards database shows that 278 corporations gave over the legal $5,000 aggregate contribution limit in 2012.2 Some of these apparent violations are explicit. The five companies listed below gave between three and twelve times their aggregate annual limits in single checks. It seems clear they are each corporations and do not simply appear as such due to filer error: searches on the Department of States website identify the first four as such, and the fifth is given the suffix INC. These are the apparent violations of law that should prompt an immediate response from the states enforcement entity. Sadly, they are likely to produce silence. Type of Transaction BCorporate BCorporate BCorporate BCorporate

Filer Name REAL ESTATE BOARD PAC SUFFOLK COUNTY CONSERVATIVE CHAIRMAN'S CLUB FRIENDS OF ED MANGANO FRIENDS OF WILLIAM NAUGHTON ASSOCIATION OF INDEPENDENT COMMERCIAL PRODUCERS, INC. PAC

Date 17-Oct-12

Amount

Corporate Donor PLANNED DEVLOP MGMT $59,000.00 CORP

22-Oct-12 21-Dec-12 18-Sep-12

$50,000.00 KOCH IND INC $25,000.00 BOLLA MANAGEMENT $18,300.00 KINGS PARK IND INC

BCorporate

09-Feb-12

$17,500.00 CAPS UNIVERSAL INC.

Failure to Report Addresses Election law clearly requires that all contributions over $99 and all expenditures of $50 or more must be reported to the Board of Elections. Campaign treasurers need to report information such as the donor or payees name and address. The need for this disclosure is obvious. Without the inclusion of addresses, it is often impossible to tell who is funding a political campaign and might be seeking to influence a politician.

This number is likely not exact: many candidates incorrectly list donations from LLCs or PACs as corporations, meaning some of these are due to treasurers failing to obey the Boards regulations; and many corporations are reported with a variety of spellings, masking donations they may have given above the legal limit. Past investigations by NYPIRG show that these two factors generally balance out. The Boards complete disregard for three complaints filed in recent years makes it pointless to perform a thorough investigation.

An examination of the donations reported between 2011 and 2013 shows that this requirement is routinely ignored. 2,168 committees failed to report the address of at least one donor over $99 that was not identified as an unitemized grouping of smaller donations. There were a total of 18,156 of these donations. Of these, Senator Greg Ball failed to include full addresses for the largest number of contributors:

10 Committees Missing the Most Donor Addresses Donors >$100 Missing All/ Part of Address 387 275 248 208 201 183 158 152 151 142

Committee Name NEW YORKERS ON THE BALL NEW YORK ANESTHESIOLOGISTS POLITICAL ACTION COMMITTEE FRIENDS OF DENISE SHEEHAN RENSSELAER COUNTY REPUBLICAN COMMITTEE FRIENDS OF THOMAS F. DIVINY ULSTER COUNTY REPUBLICAN COMMITTEE CERETTO FOR ASSEMBLY WATERVLIET DEMOCRATIC ASSOCIATIONS SUFFOLK COUNTY CONSERVATIVE CHAIRMAN'S CLUB TOWN OF AVON REPUBLICAN COMMITTEE

25 of Senator Balls donations had partial information, in some cases, only the state. The remaining 362 had absolutely no part of the legally-mandated address submitted. Many of these donations were made by individuals with fairly common names such as James Ryan and Christophe [sic]3 Johnson. By failing to disclose their addresses, his committee obfuscates any attempts to determine who funded his campaign.

10 largest schedule A, B, or C donations to Senator Ball with incomplete/ missing addresses Street Address PAYPAL PAYPAL PAYPAL Donation Size $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $4,000.00

Date 2/9/2011 7/7/2011 10/22/2012 1/9/2012 1/12/2012 10/29/2012

3

City

State

Zip

ARMONK NY

10504

Donor JUAN TORRES KRISTEN K FISHER ANDREW ROSENBERG MICHAEL H BRISMAN MD JOHN J GUTLEBER BILL & MIC ENDICO

The Boards filing software is so antiquated that it does not allow filers to enter first names of more than 10 characters, so this likely misspelling of Christopher cannot be blamed on Senator Balls treasurer.

9/13/2012 7/12/2012 PAYPAL 1/9/2012 PAYPAL 1/12/2012 PAYPAL

REAL ESTATE BOARD PAC MICHAEL TOBIAS ALFRED TINGER SCUBA BIMINI DIVE RESORT

$4,000.00 $3,000.00 $2,509.95 $2,509.95

A particularly telling committee is New Yorkers For De Blasio, which had 83 donations missing parts or all of the address fields. New York City candidates are required to file with both the Board of Elections and the New York City Campaign Finance Board. When one examines DeBlasios three largest donors who had no information in the address field in the BOE database, they will find that each of these had complete information in the CFBs database. Further, New York Citys legal requirement that donors identify their employers makes it even easier to tell who is trying to exert influence on whom. Donor
Fetner, Sondra Kaufman, Idy Weingarten, Allen

Amount $4,950.00 $4,950.00 $4,950.00

Employer
SFA Properties LLC Homemaker Stone Key Group LLC

Street #
1 4273 622

Street
Bryant Park 17th Avenue Third Avenue

City
New York Brooklyn New York

State
NY NY NY

44,834 expenditures of over $49 were missing all or part of an address. Of the 5,815 committees making at least one itemized expense over this two year period, Senator Balls once again leads the pack. 66.8% of his itemized expenditures were missing at least a part of the payees address. He is joined on this list of most-frequent scofflaws by committees such as then Bronx Republican Committee Chair Jay Savinos housekeeping account, former opponent Justin Wagner, and People for Honest Government. Expenses >$49 with no address 995 479 411 379 378 370 300 290 278

Committee NEW YORKERS ON THE BALL FRIENDS OF ERNIE DAVIS COMMITTEE TO ELECT MAZIARZ STATE SENATE FRIENDS OF JUSTIN WAGNER MIKE RANZENHOFER FOR STATE SENATE PEOPLE FOR HONEST GOVERNMENT FRIENDS OF ADRIANO ESPAILLAT FRIENDS OF CHRIS J. COSCHIGNANO BRONX COUNTY GOP HOUSEKEEPING

As with donations that fail to provide addresses, this lax disclosure makes it difficult to perform the audits that are desperately needed. It also obfuscates the true recipient of campaign money. Even more troubling is that the Board has chosen to mandate the inclusion of a zip code in order to search their database. If an individual wishes to search for campaign expenditures made to vendors in a certain region, they will find it extremely difficult to locate information. A public financing system will necessarily be coupled with improvements in this area. Candidates seeking matching funds for contributions from constituents will need to verify their donors locations by providing complete information. In New York City, for example, committees need to provide detailed information about their expenditures to prove they are campaign-related and make them eligible for public funds. Dates Election law requires that committees report dates of each expenditure and contribution. 454 donations of more than $99 either did not include a date or reported an unbelievable one (for example, donations reportedly made on 5/14/1901 and 7/29/2020 were reported in the past two years). At first glance, this can seem like an extraordinarily unimportant violation of Election Law. However, it is absolutely essential if the Board is to perform its purported enforcement duties. When this information is missing, it can be impossible to tell if a donor gave over the legal limit in a calendar year. A donation appearing in a disclosure report submitted in the January 2013 filing period could have been made in July 2012 or January 2013, which could affect both a donors aggregate annual limits and a candidates limits for an election cycle. This is not a difficult problem to fix. In most cases, a simple e-mail to a treasurer could have resulted in the submission of corrections. Unfortunately, this chaos is yet another instance of the abject failure to obey state election laws created by the Boards negligence. Committees with the most missing dates for donations over $99 Missing Dates 112 21 6 5 4 4 4 4 4 4

Committee FRIENDS OF PAUL FEINER COMMITTEE LIVINGSTON COUNTY DEMOCRATIC COMMITTEE FRIENDS OF DANIEL O'DONNELL FRIENDS OF ERIN GALL SHIRLEY HUNTLEY FOR STATE SENATE FRIENDS OF TOM KEHOE FRIENDS OF SENATOR SEWARD FRIENDS OF ANTHONY SENFT CAPITAL CITY COMMITTEE NIAGARA COUNTY DEMOCRATIC COMMITTEE

Additionally, 429 itemized expenditures contained no or implausible dates. As is the case with information on addresses, this absence makes it impossible for users of the Boards website to locate these expenditures using the Boards search feature, since the date of an expenditure is a required field.

Credit Card Payments/ Reimbursements The Boards guidelines require committees to disclose who the ultimate recipients of contributions are. For example, payments to credit card companies must be accompanied by information identifying the vendors that were paid with the credit card. This requirement is an absolute necessity. If it were not in place, political committees could simply make one payment to their credit card provider each month and hide the names of the vendors they actually paid. The Boards handbook makes the requirements for reporting this information explicitly clear. Three full pages4 show that the credit card company or reimbursed individual must be listed as a payee. The political committees report must then list the names of all the vendors that received money from this payment by placing $0 in the amount field, placing the check number of the credit card payment followed by the letter R in the check number field, listing the dollar amount accompanied by the word memo in the explanation field, and filling in the rest of a payees information as if it were a normal expenditure. Only 21% of the itemized transactions from reports filed from January 2011 through January 2013 exactly followed the filing instructions provided by the board. An additional 39% of the transactions came close, but added superfluous words or characters that would prevent an auditor from analyzing these expenditures. 18,494 3,888 7,162 7,444 Total itemized expenditures Itemizations following Board regulations Itemizations partially following Board regulations Itemizations completely ignoring Board regulations

In many ways, this can be seen as a relatively minor peccadillo. For a significant number of these expenditures, viewers can still discern whom was paid and how much. However, the general sloppiness of the filings and their presentation in dozens of varying styles makes it nearly impossible to examine them on anything larger than a case-by-case scale. A user of the database cannot isolate expenditures of a certain size, and would face serious difficulties calculating the amount of money all committees paid to a particular vendor.

Campaign Finance Handbook, pp 85-87: http://www.elections.ny.gov/NYSBOE/download/finance/hndbk2013.pdf

A more serious concern is that these wildly varying ways of entering the data make it impossible to perform comprehensive audits of the sort that should be expected in a campaign finance disclosure system. A number of candidates have reported paying themselves out of their campaign committees yet failed to itemize how they spent this money. The chaotic presentation of information makes it impossible for an auditor or general user to isolate these instances without reading through each of the disclosure reports on a file-by-file basis. One example of this can be found in the campaign committee Friends of Tom OMara, which reported paying its candidate $14,863 in 2011 and 2012. While some of this money may have fallen below the $50 threshold that would have required him to itemize, it is unlikely that all of it did. In fact, one of the payments was specifically identified as being for expenses greater than $50. There are thousands of other candidates that have similarly failed to itemize their expenditures, but the nearly complete disregard for the Boards filing regulations make them all but impossible to pinpoint.

Committee FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA FRIENDS OF TOM O'MARA

Amount Date Payee $568.50 1/7/2011 THOMAS O'MARA $255.50 $618.15 $820.00 $151.29 $387.23 $529.50 $1,374.00 $2,700.00 $1,024.34 $1,034.40 $393.11 $1,100.00 $285.00 $1,344.36 $2,277.48 5/31/2011 7/27/2011 7/29/2011 9/30/2011 9/30/2011 10/8/2011 11/18/2011 11/21/2011 6/27/2012 7/12/2012 8/10/2012 8/24/2012 10/18/2012 12/3/2012 12/18/2012 TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA TOM O'MARA

Explanation MILEAGE EXPENSE REIMBURSEMENT EXPENSES EXPENSES/MILAGE EXPENSE EXPENSES EXPENSES EXPENSES EXPENSE > $50.00 TRAVEL EXPENSES EXPENSES MILEAGE UNREIMBURSED MILEAGE UNREIMBURSED MILAGE

No Payee 80 expenditures not identified as unitemized aggregates of payments less than $49 were so lacking in transparency as to include no identified payee. Committees with the most payments made to unidentified payees Payments with no payee 16 8 7 5

Committee FRIENDS OF SENATOR SEWARD FRIENDS OF ROBERT J. RODRIGUEZ COMMITTEE TO ELECT WALTER T. MOSLEY MARJORY JAEGER FOR TOWN CLERK

Missing expenditure codes The Board of Elections requires all filers to include an expenditure code for their payments. Expenditures should be labeled with a predetermined code identifying their purpose; for example, RADIO should be used for purchases of radio ads, and CMAIL should be used for campaign mailings. A huge number of expenditures are labeled with the wrong expenditure code. Shockingly, many completely omit this required information or use codes that do not match any of those provided by the Board. Others use the OTHER code, but fail to explain what these expenditures were for, as required. This makes the performance of audits nearly impossible. Ideally, a user should be able to quickly notice that a candidate spent nearly all of their campaign funds on international travel and none of their money on actual campaigning. When this requirement is ignored, auditing for personal use becomes unrealistic, as a user is required to manually read through millions of records each year.

Committees with the most missing, incorrect, or incomplete expenditure purpose codes Committee DEMOCRATIC ORGANIZATION OF QUEENS COUNTY LAWPAC OF NEW YORK NEW YORKERS ON THE BALL MIKE NOZZOLIO FOR STATE SENATE Incorrect Purpose Codes 1020 729 489 408

Non-Filers In August of 2012, NYPIRG found that 2,328 active committees with a combined total of $31,18,363.85 in the bank had not filed any July 2012 disclosure reports more than a month after their legal due date. The following chart shows some of the top scofflaws. While many of those identified below have since filed, the fact that they were able to avoid disclosing for as long as they did reveals that the Board is impotent even in this area.
Last Known $ On Hand $4,012,403.71 $1,127.007.38 $290,556.24 $200,000.00 $150,497.08 $71,430.77 $70,821.48 $66,000.00 $62,593.51 $50,000.00 $46,731.51 $45,565.82 $43,281.98 $41,556.11 $40,907.15 $40,834.90 $40,592.65 $39,615.83 $30,950.00 Last Time Reporting Transactions 2011 July 2006 January 2010 11 Pre Primary 2008 July 2012 January 2010 July 2004 11 Pre General 2008 July 2008 11 Pre Primary 2008 July 2010 32 Pre Primary 2009 July 2006 January 2012 January 2011 January 2010 July 2010 July 2011 January 2010 July Last Time Filing a NoActivityReport None Filed None Filed None Filed None Filed None Filed 2011 July None Filed None Filed None Filed None Filed None Filed None Filed 2006 July None Filed 2012 January None Filed None Filed None Filed None Filed

Committee Name FRIENDS OF STEVE LEVY FRIENDS OF PETE MC GOWAN NEW YORKERS FOR ESPADA RECALL BALL FRIENDS OF DICK GOTTFRIED FRIENDS OF LEECIA EVE COMMITTEE TO RE-ELECT STATE SENATOR OLGA A. MENDEZ ANNE ADAMS FOR JUSTICE ESPADA FOR THE PEOPLE TRUTH ABOUT BALL MONSERRATE 2010 PEOPLE FOR JIMMY DAHROUG FRIENDS OF MCCALL/MEHIEL RESPONSIBLE NEW YORK COMMITTEE TO ELECT ELIO FORCINA WRIGHT FOR THE COUNTY FRIENDS OF MICHAEL BENJAMIN NEW YORKERS FOR DILAN WILLIAM F. BOYLAND JR 2010 REELECTION CAMPAIGN

Unregistered Political Clubs Yesterday, Citizens Union identified 224 political clubs that should have registered with the Board of Elections but did not. For more information, call CUs Alex Camarda at (202) 494-0611.